Dealing With the Ebb and Flow of Freelance Income

Whether you’ve decided to pursue blogging as a full-time career or as a supplement toother online revenue, the fact is that when you work for yourself, gross monthly income will fluctuate for most people. The trick to dealing with this is to not try to live on the expectation of top monthly income coming in every month.

Strategy

The first step in dealing with the ebb and flow of gross income is to approximate average monthly income based on your previous year in business. If you can’t do that, try for six months.

Besides fluctuations, you also need to factor in taxes and emergency funds. Some people like to keep 3-6 months of operating costs on hand at all times. Except, of course, when there’s an actual emergency.

So if running your blogging business, paying bills, and setting aside a suitable amount of tax money costs you, say, $1500 per month, and income fluctuates between $1200 and $2200 per month, then you obviously do not want to live off $2200 each month.

Sounds obvious, doesn’t it? But the temptation is there, if you’re just starting out as a freelance blogger. You feel invincible, even that the money supply is infinite. Trust me, I’ve been there, having been a contractor/ freelancer for much of the past 20 years, and actually being out of work almost as often as working. My mistakes were doozies. If you have dreams of blogging full-time and want to quit your job soon, you need to drill this fundamental idea into your head.

Ideal Situation

Ideally, if you can manage it, live off of the lowest monthly income you’ve earned and put all extra revenue into a safe, relatively liquid interest-bearing investment such as an online savings account. In the above example, that means you’re living off $1200 per month, every month – not $2200, and preferably less than the average of all months. So in the months that you gross $2200, you have $1000 to put into savings. While there’s nothing wrong with putting all of that into one savings account, if you feel you may be tempted, set up a separate bank account for taxes. When it comes time to pay income, property and other taxes, you’ll have earned some interest. And you’ll have emergency funds as well.

This is of course an overly simplified treatment of how to deal with fluctuating income that comes from being a freelancer or entrepreneur, but if you get the gist of it and come up with a method that works for you, you’ll be fine. Provided you stick to the plan. Consistently living and operating on the least amount possible is a core principle of bootstrapping a business.